The Madison Diner was built in 1948 by the Fodero Dining Car Company. It was originally located on a street corner in Willow Grove, Pennsylvania (a suburb north of Philadelphia) where it was owned and operated by Harry and Marge Muchnick under the name Willow Grove Diner.

After Harry died unexpectedly at age 53, Marge and her young son, Bruce Muchnick, struggled to make a go of it through the early sixties and sold the diner when its lease ran out. In 1963 the diner was purchased and moved from its original location to a vacant lot in New Jersey. Sadly, the diner did not reopen and sat vacant through a series of owners until 1996.

In 1996, Al Packard, a retired airline pilot, Bainbridge Island resident and classic east coast- style diner aficionado purchased the diner. The diner was completely disassembled piece by piece. Each piece was numbered and the entire disassembled diner was shipped across country to Bainbridge Island where it was lovingly restored on this site. In 1997, Al Packard and his family reopened the diner under the name Blue Water Diner.

In the summer of 2007, the Food Network's Guy Fieri stopped by and featured the then Big Star Diner on the show "Diners, Drive-ins and Dives." The episode can still be seen from time to time on the Food Network.

Bainbridge Island residents, David & Lucia Shaw are the diner's newest caretakers..."We take the responsibility of running it, maintaining it and paying homage to its history very seriously! Our commitment to you, our customers, is to provide you with quality home-cooked meals that appeal to a variety of tastes while remaining true to the American diner classics. We are proud to serve you and welcome your input and stories you may have of your own about the diner."